The Daily bulletin. [volume] (Honolulu [Hawaii]) 1882-1895, 1887-11-09
REPORT ON the LOAN.


Representatives in Legislature as
sembled-Sr: In accordance with
a resolution that the Minister of
Finance inform this Assembly in
writing of the present status of the
so-called English Loan, the amount
Of bonds sold in the English market,
the charges or commissions attend
ing such sale in detail, whether or
not the bonds comply with the sta
tute authorizing their issuance, and
further that the policy of His Ma
jesty's Government in the matter be
fully explained, and whether it is
the intention of the Government to
introduce an Act for legislation in
the premises. / have the honor TO
report that: The amount of bonds
sold in London and agreed to be
delivered to the subscribers thereto
was f200, 900, for which they paid
at the rate of eos for each fl00 of
bonds, netting the sum of fl96, 900
at the disposal of the Hawaiian
Government or their financial
agents. The said agents have paid
charges out of the above proceeds
as follows: 8 per cent commission
on 100000, or 100000, to the
syndicate which it was agreed and
understood should float the loan; in
other words, which guaranteed that
all the bonds should be sold at not
less than SO, as allowed by law.
They have also paid to certain
London firms the sum of f15,000
as expenses of floating loan, etc.,
which payment has never been al
lowed by the late or the present
Government, and to which | shall
refer again.
They also authorized the pay
ment of the first six months in
terest on the bonds, amounting to
10000, against which, however, l
have now received a credit note for
f704 Is. Cd, being interest allowed
by Messrs. Matheson & Co. (the
issuing house) on sums received by
them at the Bank of England rate.
This rate, which was 81 per cent
per annum, in December, gradually
declined until April, May and June
of this year, when it was as low as
Z and per cent per annum.
Up to July 9th last no account of
the above mentioned f15,000 had
been received by this Government;
indeed, no such amount as fl5, 700
had been mentioned in all the cor
respondence from Mr.. II. r. Arm
strong, the financial agent of this
Government, although that gentle
man had forwarded to the late Min
lister of Finance a cable message,
dated London, December 9th, as
follows: "Have authorized Mathe-
sons to pay proportional expenses
out of first issue in terms of bond.
Please cable confirmation.
Armstrong"
He also wrote to the same effect
on December Both, saying: SIN the
meantime l have paid the expense
of the issue-printing, advertising,
brokerage and issuing-which
amount to a sum larger than l had
anticipated, but well within the pro-
portion of the expenses as provided
in the Act authorizing the national
loan"
No reply was given by the late
Government to the cable message
or to this part of Mr.. Armstrong;
letter, There was some ground for
this, as it would have been impossi-
bic for any one holding the interpre-
tation of the Loan Act universally
held here, to know what was meant
or what sum had been paid that re-
quired continuation from this Gov
eminent. On July 9th l received
through Messrs. G. w. Macfarlane
& Co., with the first set of bonds,
an unsigned memorandum dated
Honolulu, July 9th, which protested
to account for the f196, 900 receiv-
ed from the subscribers for bonds
in London, and by which, for the
first time, this Government became
aware that they had been charged
$4,000 Expenses of floating Loan
part of 100000 authorized by
Loan Act" and in addition to the
100000, or the commission of 5 per
cent to the syndicate. 1t would APP
pear that this $4,000 was intended
to represent three-quarters of the
100000 which the amended Loan
Act of October 10, 1886, appropri-
ates for expenses of floating loan,
etc., and which our financial agents
interpreted as being an allowance
for expenses, distinct from the 3
per cent commission. Mr.. II. r.
Armstrong, as in confirmation of
this view, sends me a copy of let
ter which he wrote to Mr.. Gibson on
August 20, 1886, and in which he
informed Mr.. Gibson that the ex-
pense of floating a loan in London
would be 81 per cent besides the 5
per cent commission to the syndi-
cate, and he gives the details. A
copy of this letter will be found in
Mr.. G. W. Macfarlane's report to
me in the loan matter dated 4th in
slant, and which report accompanies
this.
Mr.. Gibson does not appear to
have made any reply to this letter,
and the only guide as to what he un-
derstood in the premises is the Loan
A ct itSelf which his Enuernment